Debt, Obligations Under Capital Leases and Deemed Landlord Financing Liabilities

The Company’s debt, obligations under capital leases and deemed landlord financing liabilities at January 3, 2017 (Successor) and December 29, 2015 (Successor) consisted of the following (in thousands):



	Successor
	January 3, 2017		December 29, 2015
2015 Senior Credit Facility, net of debt discount of $1,035 and $1,328 and deferred financing costs of $349 and $448 at January 3, 2017 (Successor) and December 29, 2015 (Successor), respectively	$	157,616	$	152,224
Total outstanding indebtedness	157,616		152,224
Obligations under capital leases and deemed landlord financing liabilities	17,715		17,469
Total debt, net	175,331		169,693
Less: amounts due within one year	1,588		1,725
Total amounts due after one year, net	$	173,743	$	167,968

At January 3, 2017 (Successor) and December 29, 2015 (Successor), the Company assessed the amounts recorded under the 2015 Senior Credit Facility and determined that such amounts approximated fair value.

2015 Revolving Credit Facility (Successor)

On August 4, 2015, the Company refinanced its existing senior credit facility (“2013 Senior Credit Facility”) and entered into a new credit agreement (the “Credit Agreement”). The Credit Agreement, which matures on August 4, 2020, provides for a $250 million revolving credit facility (the “2015 Senior Credit Facility”). The Company utilized $164 million of proceeds from the Credit Agreement to refinance in total its 2013 Senior Credit Facility and pay costs associated with the refinancing. The 2013 Senior Credit Facility, as amended March 20, 2015, totaled $267.1 million, consisting of an initial $227.1 million term loan (“2013 Term Loan”) and a $40 million revolver (“2013 Revolver”). At the time of the refinance, a $162.5 million term loan balance was outstanding and $17.6 million of revolver capacity was utilized to support outstanding letters of credit under the 2013 Senior Credit Facility.

At the Company’s option, loans under the 2015 Senior Credit Facility may bear interest at a base rate or LIBOR, plus an applicable margin determined in accordance with a consolidated total lease adjusted leverage ratio-based pricing grid. The base rate is calculated as the highest of (a) the Federal Funds Rate plus 1⁄2 of 1%, (b) the prime rate of Bank of America, and (c) LIBOR plus 1.00%. For LIBOR loans, the applicable margin is in the range of 1.50% to 2.50%, and for base rate loans the applicable margin is in the range of 0.50% and 1.50%. The applicable margin was initially set at 2.00% for LIBOR loans and at 1.00% for base rate loans until delivery of financial statements and a compliance certificate for the fourth fiscal quarter ending after the closing date of the Credit Agreement. Following delivery of financial statements and a compliance certificate for the fourth fiscal quarter ending December 29, 2015 (Successor), the applicable margin decreased 0.25% for both LIBOR and base rate loans during the first fiscal quarter of 2016. The 2015 Senior Credit Facility capacity used to support letters of credit currently incurs fees equal to the applicable margin of 1.75%. The 2015 Senior Credit Facility unused commitment currently incurs a 0.20% fee.

The Credit Agreement contains certain financial covenants, including the maintenance of a consolidated total lease adjusted leverage ratio and a consolidated fixed charge coverage ratio. The Company was in compliance with the financial covenants as of January 3, 2017 (Successor). Substantially all of the assets of the Company are pledged as collateral under the 2015 Senior Credit Facility.

The Company capitalized lender debt discount costs and deferred financing costs of $1.4 million and $0.5 million, respectively, in connection with the refinancing and expensed $0.1 million as debt modification costs in the consolidated statements of comprehensive income (loss) for the twenty-six weeks ended December 29, 2015 (Successor). Lender debt discount costs and deferred financing costs associated with the 2015 Senior Credit Facility are presented net of the 2015 Senior Credit Facility balance on the consolidated balance sheets and will be amortized to interest expense over the term of the 2015 Senior Credit Facility. Amortization of deferred financing costs and debt discount related to the 2015 Senior Credit Facility totaled $0.4 million for the fifty-three weeks ended January 3, 2017 (Successor) and $0.2 million during the twenty-six weeks ended December 29, 2015 (Successor).

At January 3, 2017 (Successor), the weighted average interest rate on the outstanding balance of the 2015 Senior Credit Facility was 2.52%. At January 3, 2017 (Successor), the Company had a total of $72.5 million of availability for additional borrowings under the 2015 Senior Credit Facility as the Company had $159.0 million of outstanding borrowings and $18.5 million of letters of credit outstanding which reduce availability under the 2015 Senior Credit Facility.

DTH 2013 Senior Credit Facility

On April 21, 2014, DTH amended its 2013 Senior Credit Facility whereby the term loan was increased by $62.0 million to $220.0 million and the 2013 Revolver remained at $40.0 million, the proceeds of which were used for a $62.0 million partial redemption of SAG Restaurants subordinated notes (the "April 2014 Debt Refinance").

DTH determined that the April 2014 Debt Refinance did not result in a troubled debt restructuring or significant debt modification. DTH incurred lender and third-party costs associated with the April 2014 Debt Refinance of $2.5 million of which $0.2 million was capitalized as deferred financing costs, $1.6 million was capitalized as lender debt discount and $0.7 million was expensed as debt modification costs in the consolidated statements of comprehensive income (loss) for the fifty-two weeks ended December 30, 2014 (Predecessor). Deferred financing costs and debt discount associated with the 2013 Senior Credit Facility lenders who did not participate in the amendment of the 2013 Senior Credit Facility totaling $0.1 million and $0.4 million, respectively, were expensed as debt modification costs in the consolidated statements of comprehensive income (loss) for the fifty-two weeks ended December 30, 2014. The remaining deferred financing costs and debt discount associated with the 2013 Senior Credit Facility related to lenders who also participated in the amendment of the 2013 Senior Credit Facility totaling $0.7 million and $2.3 million, respectively, were carried over as deferred financing costs and lender debt discount under the 2013 Senior Credit Facility.

In March 2015, DTH amended its 2013 Senior Credit Facility to increase the 2013 Term Loan by $25.1 million to $227.1 million (the “March 2015 Debt Refinance”). A portion of the proceeds from Step 1 of the Business Combination, described in Note 3, proceeds of $10 million from the 2013 Revolver and the March 2015 Debt Refinance proceeds were used to fully redeem the then outstanding balance of subordinated notes of $111.2 million.

On March 12, 2015, DTH satisfied the rating condition in its 2013 Senior Credit Facility resulting in a decrease in interest rate to LIBOR (not to be less than 1.00%) plus a margin of 4.25%.

The Company incurred lender costs and third-party costs associated with the March 2015 Debt Refinance of $1.6 million of which $1.5 million was capitalized as lender debt discount and $0.1 million was expensed as debt modification costs in the consolidated statements of comprehensive income (loss) for the twenty-six weeks ended June 30, 2015 (Predecessor).

Lender debt discount costs and deferred financing costs associated with the 2013 Senior Credit Facility were amortized to interest expense over the term of the 2013 Term Loan using the effective interest method. Amortization of deferred financing costs including debt discount totaled $0.9 million and $1.4 million during the twenty-six weeks ended June 30, 2015 (Predecessor) and fifty-two weeks ended December 30, 2014 (Predecessor), respectively.

Subordinated Notes (Predecessor)

In connection with Step 1 of the Business Combination and the March 2015 Debt Refinance discussed above, DTH fully redeemed the outstanding balance of the SAG Restaurants LLC (SAG Restaurants) subordinated notes ("SAG Restaurants Sub Notes") and F&C Restaurant Holding Co. (F&C RHC) subordinated notes ("F&C RHC Sub Notes") on March 20, 2015 of $111.2 million.

For the twenty-six weeks ended June 30, 2015 (Predecessor) and fifty-two weeks ended December 30, 2014, interest expense related to the SAG Restaurants Sub Notes and F&C RHC Sub Notes was $3.1 million and $15.4 million (of which $0.5 million was paid in cash in connection with the April 2014 Debt Refinance), respectively.

Other Debt Information

Based on debt agreements and leases in place as of January 3, 2017 (Successor), future maturities of debt, obligations under capital leases and deemed landlord financing liabilities were as follows (in thousands):



2017	$	1,588
2018	1,422
2019	1,045
2020	159,897
2021	852
Thereafter	11,911
Total maturities	176,715
Less: debt discount and deferred financing costs	(1,384		)
Total debt, net	$	175,331